Protect Your Passion: A Guide to Insurance for Agribusinesses

Whether you're growing crops, raising livestock, or crafting artisan candles, your agribusiness is your livelihood. Imagine spending years building it, only to have it wiped out by a sudden storm, an equipment breakdown, or an illness or accident. That’s why insurance is necessary for every type of agribusiness.

Here, we look at what it is, how to get coverage that meets your needs, and ideas to help you reduce the cost.

What is agribusiness insurance?

Business insurance in general is a financial safety net that helps protect your business from unexpected challenges. Depending on your policy, agribusiness insurance can cover things like:

• Property damage from natural and manmade disasters

• Liability claims if someone gets sick or injured from one of your products or services

• Accidents on your business property

• Lost income due to incidents like crop failure

Insurance coverage needs and requirements vary from business to business. Some types are essential for protection, such as general liability coverage. Some may be required by law, such as workers’ compensation to protect employees. Others are optional, such as crop insurance.

Additional risks for agricultural and agricultural- product businesses

A farmer, a jam maker, and a local farm-to-table restaurant have different needs in terms of insurance coverage, but all should consider protection from:

• Financial risks that can include but aren’t limited to equipment breakdowns, supply-chain disruptions, loss of key employees or business partners, or changes in market demand or pricing.

• Operational risks that include but aren’t limited to product-liability claims, inventory damage or loss, legal disputes with suppliers or customers, cybersecurity threats, or compliance with health and safety regulations.

• Physical risks that can include but aren’t limited to property damage from fires, storms, or accidents; theft or vandalism; spoilage of perishable ingredients or products; or vehicle or transportation-related incidents.

For most business owners, it’s not really a matter of ‘if’ something will go wrong, it’s really a matter of ‘when.’ With the right business insurance, though, you should be shielded from devastating losses. The key is to understand your risks and find comprehensive insurance tailored to your business.

Key types of insurance to consider

While it may feel like an extra expense, in reality, agribusiness insurance can be one of the most important investments you can make. The costs will vary greatly by your agribusiness’s specific industry, size, tangible property, employees, and other variables.

Here are different types of insurance to consider:

• General liability insurance: This covers accidents that happen on your property. It’s important for farms or agribusinesses with stands, u-pick areas, or that have special events.

• Property insurance: This protects your buildings, equipment, and inventory and is essential for preserving your business’s tangible assets. If your home is on your farm, be sure to clarify whether that’s included or if it needs a separate policy.

• Workers' compensation insurance: This helps to cover medical expenses and lost wages if an employee gets injured on the job. It’s required by law in many states and counties.

• Key man insurance: This is a type of life insurance that businesses choose for financial protection in the event that the owner, a partner, or a key employee becomes unable to work or passes away.

• Event insurance: This insurance is needed when you host events on your property, such as pop-up markets. It’s also sometimes referred to as “farmers’ market insurance.” It can protect your farm or agribusiness from liability claims resulting from hosting the market, such as slips and falls or damage to vendors’ property. If you’re a vendor participating in a farmers’ market or other event on someone else’s property, you may need to get event insurance that protects your business while you’re participating.

• Crop insurance: This gives protection from losses resulting from bad weather or natural disasters. It’s critical for farms and crop-based businesses.

• Equipment-breakdown insurance: This helps replace or repair expensive farm equipment and can significantly reduce the amount you’ll have to pay out of pocket.

• Livestock insurance: This offers protection if animals are lost due to accidents or illnesses, such as recent avian-flu outbreaks.

• Business interruption insurance: This helps replace lost income if you can't operate temporarily due to a pandemic, seasonal challenges, or other unexpected events.

• Rental/renter’s insurance: If you are a landlord or lessee, look into rental/renter’s insurance. This helps ensure that both parties in the agreement are covered should there be any accidents or other issues.

When you receive quotes for insurance, if the information is confusing, ask an agribusiness advisor for advice. They may have insight that can help you figure out if the coverage will work for your business.

Compare, bundle, and negotiate: How to save on agribusiness insurance costs

As you explore agribusiness insurance options, check online insurance offerings. Also contact local insurers that specialize in agricultural businesses, as they may offer the coverage that’s most aligned with your needs. And remember: The best insight often comes from other farmers and agribusiness owners in your community. Ask them about their coverage, which company they use, and their experiences.

Here are ways to reduce the cost while getting the coverage you need:

• Comparison shop: A farm will likely find the best coverage from an insurer specializing in agriculture; a business that’s more mainstream, such as a retailer that sells locally produced goods, can shop around for conventional small business coverage.

• Bundle: Bundling policies means using one insurance company to cover most or all of your business and/or personal needs to gain special rates and discounts. This could save hundreds of dollars (or more) each year while simplifying policy management.

• Negotiate: Even when you think you’ve found the right insurance company, try to negotiate your rates—many have some flexibility but they won’t offer it unless asked. Also, be sure that you receive all the available discounts and credits. For example, an insurer may have a discount available for veterans or for safety and security measures that are already available on your property.

• Pay annually: You can save by paying premiums annually instead of monthly or quarterly, if possible. This is because most insurers tack on payment-processing and other fees for each payment you make.

• Choose a higher deductible: Another way to lower your costs is to select a higher deductible—the amount you have to pay out of pocket before a claim will be covered by insurance. However, only choose this option if you have sufficient savings or an emergency fund. Otherwise, if you can’t afford to pay the deductible when something happens, then you may not get the full coverage you expect.

Using these tips can help you reduce your insurance costs while getting the coverage you need.

HVADC has resources and financing that can help

Running a small agribusiness takes commitment, passion, and dedication—and to ensure that it prospers in the long run, it also takes the right business insurance. It’s more than financial protection—it’s peace of mind.

If a lack of funds stops you from getting the right insurance for your agribusiness, reach out to HVADC. The HVADC Agribusiness Loan Fund includes funding tailored to the specific needs of farms and agribusinesses, and does include funding opportunities for working capital. When you’re ready, reach out to learn more about how HVADC can help.